Gold eases as US dollar, yields rise in thin holiday trading

Dollar rises 0.6%, hovering near over 2-year highs

By Reuters

Published: Mon 23 Dec 2024, 9:49 PM

Gold prices edged lower in a subdued holiday-season trading on Monday, weighed down by a robust dollar and high US Treasury yields as investors awaited clearer signals on the Federal Reserve’s monetary policy for 2025.

Spot gold was down 0.3 per cent at $2,612.58 per ounce, as of 1505 GMT. US gold futures eased 0.7 per cent to $2,627.60.

The dollar index was up 0.6 per cent against its rivals, hovering around an over two-year high, reducing gold’s appeal for holders of other currencies, while the benchmark U.S. 10-year yield also gained.

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“The market continues to digest the results of the Federal Open Market Committee (FOMC) meeting last week. A shallower rate path for 2025 is now getting factored in, probably a pause in January, maybe March as well,” said Peter Grant, vice president and senior metals strategist at Zaner Metals.

Despite the Fed’s 25-basis-point rate cut last week, its signal of fewer rate reductions in 2025 sent gold to its lowest levels since mid-November last week.

While non-yielding gold benefits in low-interest-rate environments, investors are recalibrating expectations for next year.

Gold has set multiple record highs this year, rising 27 per cent so far to mark its best annual performance since 2010, driven by robust central bank buying, geopolitical tensions and monetary policy easing by major banks.

“The next big impact is the incoming presidency of Trump and the initial presidential decrees that he might declare. This has the potential to add to market volatility and be bullish for gold prices,” said Michael Langford, chief investment officer at Scorpion Minerals.

President-elect Donald Trump takes office on Jan. 20.

Gold, often considered a safe-haven asset, typically performs well during economic uncertainties.

Spot silver was steady at $29.52 per ounce and platinum climbed 1.4 per cent to $939.05 while palladium gained 0.8 per cent to $927.74.